The traffic network pulled no punches in the filing stating that Entercom’s scheme was so perverse and all-encompassing that even Vladimir Putin would be left blushing. USTN repeatedly refers to Entercom as a bully and is seeking more than $5 million from the radio company. “Plaintiffs ask this Court to right the wrongs of Defendants and send a message to BULLIES everywhere that honor and integrity still mean something in America, that wrongs can still be righted, and that victims can be compensated for the wrongs of others.” Here are the details.
During a conference call with employees Monday night USTN CEO Ivan Shulman said this was a classic case of David vs. Goliath and all about bad corporate behavior.
Just a few months ago, it appeared as if Entercom had come along to save the day for United States Traffic Network when it took an equity position in USTN. In a May 3 USTN press release, Entercom CEO David Field stated: “We are pleased to announce our new partnership with USTN. Their new management team has moved quickly to fix their issues and establish a solid business model following the company’s separation from its former corporate parent. We look forward to participating in their future growth as they capitalize on the significant opportunities in this attractive market segment.” That relationship has clearly taken a very bad turn
In a lawsuit filed last week USTN says it entered into good faith negotiations with Entercom to facilitate a sale, and Entercom “fraudulently stole data to create a competitive company.” The lawsuit alleges that Entercom entered negotiations with USTN to purchase the company, walked away at the last minute, and informed USTN that it was going to develop a direct competitive business based upon the information gleaned during the due diligence/discovery process.
The suit also alleges that Entercom intentionally induced USTN to miss a scheduled debt payment to Entercom under the pretenses that this payment would be unnecessary due to the planned closing of the purchase transaction. “Defendants on July 25th, sent written notification that the $1,300,000 payment had not been made, and that USTN was in default under the April loan agreement. Defendants did this knowing that the deal had not closed on the 24th, knowing that under the terms the loan was to be rescinded, and knowing that they had repeatedly instructed plaintiffs to not seek additional financing, raise additional capital, or even hire an investment banker.”
Read the court filing HERE
